Dig into the roots of profits – making bettingSQUARE ROOT OFF! (Part 2)

By Denton Jardine's

Square root staking - sounds a bit intimidating, doesn't it?

But it's not. In fact, it's an easy way of playing up your profits and keeping your staking well under control.

In last month's P.P.M., I introduced the concept of square root betting. Let's just go over it again: You have a Base Bet, say $1 or $2, and your every bet to win is this Base Bet plus the square root of any accumulated profits.

If there are no profits, your bet remains at $1 or $2, whatever your base bet happens to be (and I recommend that it be as low as possible, $1).

As profits rise, you find the amount to be added to each Base Bet by checking the square root profits table (see Page 17).

Even standing on its own, with a simple $1 Base Bet approach, the square root system is good. But it's when you add 'flow' betting that it starts to get truly exciting.

American author James Selvidge has this to say about square root betting: "The University of Washington computer some time ago identified as the optimum wagering platform the betting of the smallest possible unit, plus square root of the profits at point of the previous wager.

"This we call the BB+SR Flow, which is multiplied by the individual's comfort zone."

What Selvidge is referring to is the 'flow' approach to this form of staking. What you do is assume a $1 Base Bet and the bets flowing from this form one level of flows. Each bet to come is worked out from the $1 bet, but after you have done the workout, you multiply the bet by 10, or however many $1 flows you want.

Why work it out from the $1 flows? Well, let's say you had $5 profit from 10 flows. That's $50 profit. If you took the $50 as the profit, your square root figure to be added to the next Base Bet would be $7. But by splitting the $50 into 10 flows, you increase your boldness. The square root impact for a $5 profit is $2, and this is multiplied 10 times. That means instead of adding $7 to your Base Bet, you add $20 (that is, 10 flows of $2 each).

You are using exactly the same principle but you are beefing up the attack.

James Selvidge, author of Money Management says: "In using (this approach) it is important to use the lowest possible Base Bet ($l), duplicating or multiplying the bet-by-bet computations by as many parallel flows as suits the bettor's comfort zone.

"This will maximise the impact of the square root dynamics and achieve the highest profit level obtainable."

Square root betting matches up well to level stakes. Look at the following set of results:

BET

RET.

WIN

LOSS

BAL.

1

0

0

1

-1

1

2

1

0

-

1

0

0

1

-1

1

0

0

1

-2

1

6

5

0

+3

3

-

-

3

-

1

6

5

0

+5

3

0

0

3

+2

2

8

6

0

+8

4

24

20

0

+28

6

0

0

6

+22

6

0

0

6

+16

5

20

15

0

+31

7

0

0

7

+24

6

18

12

0

+36

This $1 flow has produced $36 profit on an outlay of $48. But if we assume there were 10 of these flows, the situation would be $480 bet for a profit of $360.

So we have actually bet each horse for 10 x $1 Base Bet flows, plus any square root profit, worked out separately for each $1 flow.

You can see from this that the method has much to commend it.

As US author James Quinn points out: "One of the best advantages is that it offers the best return on money invested by the small bettor. That is, the risk factor associated with the method is as low as can be found anywhere.

"A second advantage is that the method ... gets good results at minimal risk over a season's time, a month's time, a week's time or even one day's play.

"Best results are achieved from continuous play."

Quinn has pointed out how the staking approach is highly sensitive to longshot payoffs. When these happen, however intermittently, profit margins increase dramatically.

James Selvidge adds: "Most gains occur from the smallest base bet, as profits depend on other profits more than risk capital, and money lost during any series of losses must be minimised."

Explaining the method in more detail, Selvidge says: "We know now that $1 is the proper Base Bet. Let's presume a player new to the game, wishing to test learning and ability to date, and not willing to take undue risk, opts for conservative mode.

"Total bank requirement is, say, $40. This will amply fund two flows of $1 each. To tap out infers 20 successive losses. If this happens, the bettor is $40 out of pocket.

"But let's say he decides to take a second swing, another $40 risk. When balance of win percentage and average payoff is positive, the profit and loss situation will commonly waffle for a while.

"In actual racing, wins and losses do not come in nice, even patterns. Both tend to cluster. Suppose 30% at $12 spaces evenly for $8xx$12xxx$16xx. In this case, $2 bet level stakes there is a $36 return for $16 profit on bets of $2 each for the 10 bets. Now, though, after the same sequence comes xxxxxxx$8, $12,$16.

"Via flat bets, the profit is the same, $16, but via BB+SR the profit is $30. When the balance increases, specially when the win percentage moves past 35% toward the 40-45% range, each win cluster will take flows to a new plateau, the degree dependent on the sprinkling and the level of higher payoffs interspersed with the favourites."

Selvidge talks about the position when a $1 flow reaches a profit of $300. He says: "The computer has shown us that if a $1 Base flow reaches a profit of $300, whatever is being supported IS positive.

Whether it is personally handicapped choices, or an angle play of some kind, it has a very low probability of becoming negative sufficient to jeopardise long-term results.

"At this point, the player can opt for a switch to positive mode. When each of the two $1 Base flows are at a profit of $300 (aggregate profit $600) a version of the stock market split is actuated.

"The two flows of $300 become 10 flows at $60. Two $1 Base flows at $300 profit would call for a next bet of $38 ($18 square root plus $1 Base times two flows).

"By the split to 10 flows, one flow is $8 as the square root, plus $1 Base, equalling $9. Multiplying 10 parallel flows means the next bet would be $90.

"This relationship is maintained until, again, the profit is at $300 per flow ($3,000). At this point, another split can be orchestrated, evolving 25 flows at $120. Instead of the next bet being $18+$1 times 10 ($190) the next bet becomes $11+$1 times 25 ($300).

"At the next $300 level (Profit $7,500) you go to 50 flows at $150 (next bet $780), then at a profit of $15,000 you have 100 flows at $150 (next bet $1300)."

Selvidge's explanation clearly shows the great thrust that the square root staking plan can have once you start to amass profits. And always remember, the only capital you are risking all the time is the $1 Base Bet. The rest is playup money from your profits.

The sort of approach being advocated here is certainly one which will appeal to those punters who like to keep their betting in safe order. But even those of you who saunter into your local TAB agency and bet race to race could easily adopt it.

Let's say you are a $5 per race bettor. You can have 5 x $1 flows. Work out all your square roots on $1 and then multiply by 5 when you are in profit. You will be keeping your betting in order, and capital wise you will never be risking more than $1 per race.

You will probably find this a much more enjoyable, exciting and more profitable exercise than (a) sloppy, haphazard betting or (b) plain old level stakes.